Dogecoin may have initially just been a joke, but according to a recent study by 21Shares, a small amount of DOGE in the investment portfolio could yield significant results.
The cryptocurrency investment firm found that even a modest 1% allocation to the token—when combined with Bitcoin in a growth-oriented strategy—could enhance overall returns without significantly increasing risk.
By testing various portfolio setups, 21Shares discovered that adding Bitcoin and Dogecoin to the traditional 60/40 stock-bond mix raised the average annual return from 7.25% to nearly 9%.
Risk-adjusted performance has also improved, with a higher Sharpe ratio and only a slight drawdown. The report emphasizes that the key is consistent rebalancing—ideally monthly—to prevent volatility from accumulating over time.
Why Dogecoin? According to the firm, its relatively low correlation with both traditional finance and the broader cryptocurrency market, along with its history of exceptional growth, makes it not just a speculative meme but also a truly diversifying tool.
21Shares also made predictions about the potential price trajectory of Dogecoin in this cycle. In a cautious scenario, if the token grows 10% annually from its 2021 peak of 0.73 dollars, it could reach about 0.38 dollars by the end of 2025—doubling the current price but still not achieving a new record.
An average estimate suggests that Dogecoin retains 3% of the cryptocurrency market share, increasing to 5 trillion dollars. That would place its market capitalization at around 150 billion dollars, suggesting a price of about 1 dollar.
The bullish outlook borrows from historical growth trends. If DOGE replicates its previous compound annual growth rate of 189%—measured from the 2018 low to the cycle low in 2022—it could surge as high as 1.42 dollars. That outcome would require strong retail momentum, broader utility, and deeper integration into major platforms, such as Elon Musk's X.
For investors looking to adopt a structured and disciplined approach, 21Shares argues that Dogecoin may not just be a passing internet fad but also a smart risk.